Canada vows to meet NATO defense budget target early, then spend more

Straits Times

09-06-2025

Canada's Prime Minister Mark Carney makes a speech about defense and security at the Munk School in Toronto, Ontario, Canada June 9, 2025. REUTERS/Arlyn McAdorey
Royal Canadian Navy submarine HMCS Victoria sails in the vicinity of Esquimalt Harbour while wearing a poppy on its sail in Esquimalt, British Columbia, Canada November 5, 2021. S1 Kendric Grasby/Canadian Forces/Handout via REUTERS/File Photo
A pair of Royal Canadian Air Force (RCAF) CF-188 Hornets fly with a United States Navy EA-18G Growler during Exercise Maple Flag 51 over Alberta, Canada June 15, 2018. OS Erica Seymour/Canadian Forces/Handout via REUTERS/File Photo
TORONTO - Canada, under pressure to spend more on its military, vowed on Monday to boost funding for the armed forces and hit NATO's 2% military spending target this fiscal year, five years earlier than promised.
Prime Minister Mark Carney also said Canada was likely in future to devote a greater percentage of GDP on defense, given the need to replace outdated equipment and reduce its heavy reliance on Washington.
"Now is the time to act with urgency, force, and determination," Carney said in a speech in Toronto, reiterating promises to work more closely with Europe's defense industry.
The United States and other NATO allies have complained for years about what they see as the inadequate level of Canadian military funding. Ottawa spends about 1.4% of its gross domestic product on defense, well below its NATO commitment.
The Liberal government plans to meet the 2% target by spending an additional C$9 billion ($6.58 billion) this fiscal year. The money will go toward increasing recruitment, repairing equipment and forging new defense relationships.
"We think that this proportion of spending relative to GDP is going to go up somewhat," Carney later told reporters. "That's important because it will protect Canadians."
Pressed as to how Canada could afford this at a time of rising budget deficits, Carney cited efforts to cut spending while ruling out tax cuts.
Reuters reported last month that NATO chief Mark Rutte had proposed alliance members should boost defense spending to 3.5% of GDP and commit a further 1.5% to broader security-related spending to meet a U.S. demand for a 5% target.
Carney won the April 28 election on a promise to stand up to U.S. President Donald Trump's tariffs and also to reduce the country's military reliance on Washington.
Randall Bartlett, deputy chief economist at Desjardins, said the extra spending would increase the budget deficit beyond the roughly C$60 billion Carney's election platform promised.
"If the government aims to increase defense spending to 3.5% of GDP by 2030 the deficit will only keep increasing," he said.
Carney said another reason for Ottawa to act was what he called the decision by the United States to gradually withdraw from the concept of collective security.
"Rising great powers are now in strategic competition with America. A new imperialism threatens. Middle powers compete for interests and attention, knowing that if they are not at the table, they will be on the menu," he said.
The previous Liberal government last year formally committed to hit the NATO target by 2032. During the election campaign Carney pledged to get to 2% by 2030.
Canada will boost pay for the armed forces and buy new submarines, aircraft, ships, armed vehicles and artillery, as well as new radar, drones and sensors to monitor the sea floor and the Arctic, Carney said, without giving details. REUTERS
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